‘UK house prices in biggest rise since 2007’Comment on this story
London - British house prices recorded their biggest annual rise since the start of the financial crisis last month, figures from mortgage lender Halifax showed on Wednesday, in news that casts doubt on other signs that the housing market is slowing.
House prices in the three months to July were 10.2 percent higher than the same period a year ago, Halifax said, the largest annual increase since September 2007, the same month that there was a run on British lender Northern Rock.
July's annual rise was driven by a 1.4 percent jump month-on-month jump in house prices, which followed a 0.4 percent fall in June, and exceeded all forecasts in a Reuters poll of economists last week.
“The housing market is shaking off new mortgage rules. This is important, as the Bank of England have recently been pointing to the housing market as a good reason for broader economic growth to slow,” said Rob Wood, UK economist at Berenberg.
Since April British mortgage lenders have been required to conduct tighter credit checks on new borrowers, and in June the BoE limited how much most home-buyers could borrow in an effort to curb rising household debt levels.
April's measures led to a fall in mortgage approvals, but it has been unclear if this would be temporary or permanent. Mortgage approvals began to rise again in June.
“While supply remains low, housing demand continues to be supported by a continuing economic recovery, growth in employment, improving consumer confidence and low mortgage rates,” said Stephen Noakes, mortgages director at Halifax.
However, he noted that wages were still rising by less than inflation - something which in the medium-term may slow house price inflation unless greater borrowing bridges the gap.
House price rises have been concentrated in London, but more recently have shown signs of spreading.
In the second quarter of 2014, Halifax said that house prices in London were up 15.9 percent on the year, compared to an 8.8 percent rise nationally. - Reuters